fcb afirma

ANNUAL REPORT

The Annual Report is an annual publication prepared by the AAB Executive Office and

available in the digital format on the website www.aab.al

The information in this report may be used for non-lucrative purposes only, mentioning

“Annual Report 2020” published by the Albanian Association of Banks (AAB)

The partial or total transformation of the content is not permitted.

Design & Layout: FCB AFIRMA

Albanian Association of Banks

Official Offices: Rr. “Ibrahim Rugova”, Sky Tower 9/3, Tirana

Registered with the District Court of Tirana under Court Decision no.1153, dated 14/04/1999

TAX ID: K51626015F

1. MESSAGE FROM THE CHAIRMAN

2. ORGANIZATIONAL STRUCTURE

3. MEMBERSHIP

4. HIGHLIGHTS OF AAB ACTIVITIES IN 2020

5. FACTS AND FIGURES 2020 - BANKING SECTOR IN ALBANIA

6. MAIN PILLARS OF AAB

A) REGULATORY FRAMEWORK IMPROVEMENT & COLLABORATION

WITH AUTHORITIES

B) BANKING TRANSFORMATION

C) TRAINING & DEVELOPMENT OF BANK EMPLOYEES

D) FINANCIAL EDUCATION

E) COMMUNICATIONS, PUBLIC RELATIONS AND ADVOCACY

7. TECHNICAL COMMITTEES - HIGHLIGHTS AND ACHIEVEMENTS

8. OTHER MEETINGS

9. FIGURES ON THE MEMBER BANKS

10. FINANCIAL STATEMENTS

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CONTENT

A N N UA L R E P O RT 2020 4

Dear Reader,

As Chairman of AAB, I have the pleasure to introduce

you to the Annual Report 2020 of the Albanian Associa-

tion of Banks.

MESSAGE FROM THE CHAIRMAN

This has been an uncommon, unprecedented year for our

generations. A battle against Covid-19! Our quality of life

was hugely affected, yet maintaining the health of both

employees and customers emerged as our key task. A

myriad of measures at an organizational, logistical, op-

erational and regulatory level were introduced in banks,

like never before in terms of intensity and time of opera-

tion. Everything was done to continue providing banking

services, with no interruption at any time, providing the

best and most effective support for our society and the

economy in coping with the effects of Covid-19.

Only history will truly tell what happened and how it hap-

pened, but we are certain that:

• banks’ policies and strategies regarding disaster recov-

ery and recovery plans were very successful, adapting

to the Covid-19 disaster;

• investments made over the years on digitalization of

banking services ensured the continuation of remote

service provision, with no need for employees or clients

to be physically present at the branches;

• solidarity and cooperation reached higher levels. Over

5 A N N UA L R E P O RT 2020

tor is a guarantee for the smooth running of their financial

activity. The increase of deposits and lending, despite

the difficult conditions from the coercive measures due

to Covid-19, strengthened the bank-client bonds. The

change set in motion to tailor the bank to customer needs

proved successful, manifesting an increase in the use of

online services, cards and other digital banking channels.

We aim to further our growth, that is why in the last two

months of the year we held a MasterCard-funded cam-

paign on card usage.

2020 was an essential year for AAB itself. The new AAB

Statute was adopted in accordance with the modern and

best standards on structural organization, and pursuant

to AAB mission and activity.

This publication provides a plethora of information on the

activity of AAB. I invite you to flip through these pages

and you are welcome to give us your suggestions for pos-

sible improvements for the years to come!

Sincerely,

Bledar Shella

Chairman


23 thousand businesses and households, with bank

loans accounting for ALL 200 billion, benefited from

the deferral of loan instalment;

• banks became real contributors, and also the most

powerful ones, in ensuring financial stability. Over

EUR 220 million in deferred instalments were made

available to borrowers for liquidity purposes - imme-

diately added to the market;

• complete and unanimous support of government

policies regarding state guarantees for addressing

businesses affected by Covid-19.

Contrary to what happened during any previous cri-

sis, the one caused by Covid-19 found the banks very

strong and well-equipped. The measures undertaken

after the 2008-2010 crisis seem to have contributed

to alleviate the disaster. Banks kept at bay the effects

of the disaster and, moreover, they did not amplify its

effects on the economy or society. This is another no-

table achievement marked in 2020.

Individuals and commercial entities put us once again

to the test and proved that relying on the banking sec-


ORGANIZATIONAL STRUCTURE

The Assembly is the highest decision-making body of AAB. Only the duly designated representative(s) of the mem-

bers may attend the Assembly of Members meetings.

At the end of 2020, the Assembly of Members comprised of 12 members.

The following list details the AAB member banks and the Assembly of Members:

Alpha Bank Albania / Georgios Papanastasiou, Chief Executive Officer

American Bank of Investments / Andi Ballta, Chief Executive Officer

Banka Kombëtare Tregtare / Seyhan Pencabligil, Chief Executive Officer & Board Member

Credins Bank / Maltin Korkuti, Chief Executive Officer

First Investment Bank Albania / Bozhidar Todorov, Chief Executive Officer

Intesa Sanpaolo Bank Albania / Silvio Pedrazzi, Chief Executive Officer

Procredit Bank Albania / Agan Azemi, Member of Management Board

Mirsad Haliti, Member of Management Board

Raiffeisen Bank Albania / Christian Canacaris, Chief Executive Officer

OTP Bank Albania / Bledar Shella, Chief Executive Officer

Tirana Bank / Dritan Mustafa, Chief Executive Officer

Union Bank / Flutura Veipi, Chief Executive Officer

United Bank of Albania / Amel Kovačević, Chief Executive Officer

* As of December 2020

ASSEMBLY OF MEMBERS*



The members of the Executive Committee are elected by the Assembly of Members for a two-year term. It is com-

posed by five members, three of which are elected from the first six banks with the highest share on the total assets

of the banking sector, and the other two members are elected amongst the remaining member banks.

Members having completed their term of office may be re-elected.

Deputy Chairperson

Chief Executive Officer,

Credins Bank

MALTIN KORKUTI

Chairman


Intesa Sanpaolo Bank Albania

SILVIO PEDRAZZI

Member


Tirana Bank

DRITAN MUSTAFA

Member


Alpha Bank Albania

GEORGIOS PAPANASTASIOU

Member


American Bank of Investments

ANDI BALLTA

EXECUTIVE COMMITTEE MEMBERS*


SECRETARIAT

TECHNICAL COMMITTEES*

The day-to-day running of the Secretariat is headed by

the Secretary General, who is appointed by the Executive

Committee. Some of the duties of the Secretariat, which

are managed by the Secretary General, consist of:

» Implementation of the decisions of the Assembly.

» Ensuring that members get notified on the resolutions

of the Assembly of Members and the Executive Com-

mittee and that these resolutions are duly executed.

» Bank Security Committee / Bajram Ibraj, Chairperson,

Intesa Sanpaolo Bank Albania

» Cards Committee / Erion Maxhari, Chairperson, First

Investment Bank Albania

» Compliance Committee / Markelian Rriska, Chairper-

son, Intesa Sanpaolo Bank Albania

» Human Resources Committee / Valbona Zeneli, Chair-

person, Raiffeisen Bank Albania

» Information Security Committee / Dritan Gucaj, Chair-

person, OTP Bank Albania

» Internal Audit Committee / Dorida Stambolla, Chair-

person, Raiffeisen Bank Albania

» Fulfilment of the duties assigned by the Executive

Committee.

» Representation of the Association at governmental

bodies, the Court and third parties (upon due authori-

zations), both at national and international level.

» Implementation of the annual budget and business

plan.

» Drafting of information to be released by the Associ-

ation and its submission to the Executive Committee.

» Supervision of the AAB accounts and cooperation with

the Auditor.

» Drafting and signature of the AAB financial state-

ments.

Mr. Spiro Brumbulli is currently holding the position of the

AAB Secretary General.

» Legal Committee / Veronika Prifti, Chairperson, Amer-

ican Bank of Investments

» Public Relations Committee / Lutjana Konomi, Chair-

person, First Investment Bank Albania

» Payment Systems Committee / Najada Xhaxha,

Chairperson, Tirana Bank

» Treasury and Financial Market Committee / Suela

Totokoci, Chairperson, Intesa Sanpaolo Bank Albania

» Risk Management Committee / Elona Bollano, Chair-

person, Banka Kombëtare Tregtare

» Information Technology Committee / Alketa Lamce,

Chairperson, Intesa Sanpaolo Bank Albania


SPIRO BRUMBULLI

AAB

Secretary

General


MEMBERSHIPS

AAB is a member, associate member, or partner to the following national/international organizations.

National Memberships:

» National Economic Council

» Tax Council

» Economic Council of Tirana Municipality

» ICC Albania

» National Labour Council

» National Payment System Committee

International Memberships:

» European Banking Federation (EBF)

» Banking Association for Central and Eastern Europe (BACEE)

» INTERBALKAN Forum of Banking Associations


HIGHLIGHTS OF AAB ACTIVITIES IN 2020

» The Assembly of Members held 3 meetings, whereas

the Executive Committee held other 4 meetings.

» The new charter of AAB - In March 2020, the tendering

procedures for the new Charter for the Albanian Asso-

ciation of Banks was opened. On December 10th, 2020,

the AAB Assembly adopted the new AAB Charter.

» Presentation of findings - The 2nd part of the study

“Customer confidence and perception in banks and the

banking sector”.

» Business Breakfast with journalists.

» Traditional trainings delivered online - During the year,

19 trainings (on-site and online) were organized with

the attendance of 275 member bank employees. The

virtual international classes provided by the House of

Trainings were attended by 300 bank employees from

Albania, respectively 58 trainings.

» Supporting banks during the pandemic emergency

and lockdown with assistance in different operational

issues (specifically, with movement permission, media

coverage, online services, etc.).

» Two draft state loan guaranties, the draft law on fiscal

and penal amnesty, three laws of the Albanian Finan-

cial Supervisory Authority (AFSA), and the draft law on

central register of banks accounts.

» Four draft bylaws issued by the Ministry of Finance and

Economy, an amendment to the instruction “On tax

procedures”, one draft regulation issued by Ministry of

Justice and two draft regulations issued by AFSA.

» Participation in “The Trieste Eastern Europe Invest-

ment Forum - Investment and Finance for the Post-

Covid Recovery”, an international regional forum or-

ganised by The Italian Banking, Insurance and Finance

Federation.

» Communication with different institutions - Parliamen-

tary Commission for Economy and Finance, Ministry

of Finance and Economy, Bank of Albania, Albanian

Financial Supervisory Authority, General Director-

ate of Taxation, National Information Society Agency

(AKShI), State Cadastre Agency (AShK), IMF, EU Del-

egation, EBF, BACEE and other banks associations of

neighbour countries.

» Follow-up in cooperation with the General Director-

ate of Taxation on the implementation of two projects:

Common Reporting Standards (operational from No-

vember 15th) and Fiscalization Project (the first phase

of the project starts on January 1st, 2021).

» Online seminars and workshops (webinars) on com-

puter frauds, establishing a culture of employee en-

gagement, fiscalization, common reporting standards

and 3 webinars on cyber security during October 2020.

» Media coverage: 4 interviews with the Chairman, 12

interviews with the Secretary General and 6 interviews

with members of Technical Committees.

» New campaign on card usage during November and

December 2020, sponsored by MasterCard.

» Periodic editions of the monthly newsletter, a series

statistics, magazine, Annual Report and CSR Report.


During the year, the COVID-19 pandemic emerged as a

serious challenge under review and banks found them-

selves dealing with vast range of increasing priorities

that required concrete steps.

Banks also offered an array of programs to help retail

and business clients affected by the pandemic, including

fee waivers, deferred loan payments and other accom-

modations.

In this section, you will find a series of highlights on

the coordination and collaboration efforts to address

Covid-19 pandemic issues.

These efforts include:

» On March 17th, as the result of the COVID-19 situation

and following the decision of the Supervisory Council

of the Bank of Albania and the joint order of the Prime

Minister and the Bank of Albania’s Governor, the pay-

ment of business and retail loan instalments facing

repayment difficulties was deferred for three months.

AAB coordinated the data collection process and was

part of the correspondence between institutions.

» In addition to the said three-month loan instalment

payment relief measure, several banks waived online

service commissions (home and/or mobile banking), by

encouraging the use of digital channels. As well, com-

mission-free cash withdrawal at other banks’ ATMs

was promoted.

» AAB cooperated with the Ministry of Finance and

Economy on the Sovereign Guarantee instrument for

companies affected by the financial impact of the pan-

demic.

» On May 13th, AAB addressed a letter to the Minister of

Finance and Economy requesting the extension of the

deadline for business entities applying for the respec-

tive guarantee schemes.

» On May 20th, a proposal was sent to the Bank of Alba-

nia on the extension of the moratorium on loans.

» On May 21st, AAB forwarded to the Ministry of Finance

and Economy all the banks’ concerns on the Guarantee

Agreement on the traders’ borrowings to enable the

necessary recovery-oriented financing for trade ac-

tivities affected by the situation caused by Covid-19.

The request addressed the removal of the foreseen

5% maximum financing cost threshold (annual interest

rate) and its reduction to the 3% maximum margin of

the index specified in the Sovereign Guarantee Agree-

ment no. 2.

» Through letter dated May 21st addressed to the Bank of

Albania, the banking sector introduced the authorities

to a series of proposals aiming the minimization of the

Covid-19 effects on the economy and on banks.

» Effective media communication during the year - The

AAB Chairman & the AAB Secretary General were in-

terviewed and invited to several talk shows to provide

their position on the banks’ response to the COVID-19

pandemic, which were widely covered by the key me-

dia channels in the country.

BANKS’ RESPONSE TO COVID-19 ACTIVITIES COORDINATED BY THE AAB


About 23,000 Albanian businesses and households have benefitted

from the relief measures, accounting for about ALL 200 billion in loans in

banks.

About EUR 220 million were left available to borrowers due to the

deferred loan instalment payments.

-3.31% GDP Annual Growth Rate.

1.6% the average inflation rate in 2020.

FACTS AND FIGURES 2020...the capacities of the banking sector marked a considerable increase, placing it on the solution side rather than the problem side. The role of banks remains essential, both during the current phase of the pan-demic control and during the future phase of economic recovery*.

OVERVIEW:

77.8% Debt-to-GDP ratio.

0.5% Base interest rate.

Above 18% bank’s capitalisation level.

12 banks, 4 of which with Albanian capital and 8 with foreign capital.

Of the latter, 6 originate from European Union countries.

425 branches and agencies of banks.

*Bank of Albania: Annual Report 2020, page 3


6.8% average growth of loan portfolio.

4.6 percentage points contribution to growth from loans to enterprises.

2.2 percentage points contribution to growth from loans to individuals.

Loans in lek accounted for 50% of total loan portfolio.

10.5% annual growth rate of the lek loan portfolio.

8.1% Non-Performing Loans to Total Loans Ratio.

41.7% Credit-to-GDP ratio.

LOANS:


6.7% annual growth deposits rate.

DEPOSIT:

PAYMENTS:

80.2% Deposits to GDP ratio.

50.1% of electronic payments consist of cards payments.

13.7% increase in the transaction volume of home banking payments.

8.8% increase in the value of home banking transactions.

7.03 non-cash transactions per account through Internet.

8.5% increase in the number of POSs.

*Data source: Bank of Albania


THE COVID-19 PANDEMIC:

Facilitations related to the implementation of regulato-

ry requirements on credit classification and creation of

funds for loan provisions. The validity of this provision

with a term between March - May 2020 was extended

to cover the June - August 2020 period. The term for re-

structured loans was extended to the end of 2020.

Commission-free transactions applied by banks for elec-

tronic credit transfers in ALL, as well as removal of fees

for participants in payment systems operated by the

Bank of Albania;

The Bank of Albania suspended the banks’ distribution of

carried and realized profits, initially until June 2020 and

then until the end of the year;

Facilitation to the extent of risk weighting of domestic

banks’ exposures to the Albanian government debt secu-

rities in foreign currency, for securities issued during 2020

and until their maturity term, as well as for the exclusion

of this exposure from the calculation of the exposure limit;

Delay of the entry into force of regulatory amendments

related to tighter credit restructuring requirements;

An to the Regulation “On risk management from large

exposures of banks”, which banks can deploy to exclude

these types of exposures from the calculation of the

exposure limit;


MAIN PILLARS OF AABAAB business plan firmly stands on five main pillars and strategic objectives that support the Associations’ vision, mission and goals.

√ Regulatory framework improvement & Collaboration with authorities

√ Banking transformation

√ Training & development of banking employees

√ Financial education

√ Communications, public relations and advocacy

REGULATORY FRAMEWORK IMPROVEMENT & COLLABORATION WITH AUTHORITIES

Legal and sublegal frameworkDuring 2020, the banking sector was involved in the consultation process for several draft laws, some of which were

subsequently adopted by the Albanian Parliament, as well as their respective bylaws, as follows:

• Law “On automatic exchange of information”. This law was adopted in the framework of Albania’s commitment to

implement the Common Reporting Standard (CRS) established by OECD countries, on the automatic exchange of

information to combat the issue of offshore tax evasion and avoidance of money collection abroad. This law will

enable the automatic exchange of financial accounts information with the countries participatory to the agreement.

This system will operate based on a systematic and periodic transmission of taxpayers’ data by the participating

countries.

• Decision of the Council of Ministers “On determining the rules and procedures for the automatic exchange of infor-

mation.”

• Law “On Collective Investment Albanian Parliament”, which aims to improve and further develop the legal and reg-

ulatory framework for the investment funds and securities sector.

• Law “On Capital Markets”, which aims to develop capital markets, increase the economy financing possibilities,

increase opportunities for investors for better profits, increase opportunities for intermediaries, increase the profit-

ability of the capital markets’ infrastructure.

• Law “On financial markets based on distributed ledger technology”, which regulates the terms for licensing, moni-

toring, supervision of entities that exercise the activity of distribution, trading and storage of digital tokens and/or

virtual currencies, of the agent of digital tokens, innovative service providers and automated collective investment

ventures.


• Law “On the Central Register of Bank Accounts”. For the first time, this law aims to establish a central register of

bank accounts and security boxes in the Republic of Albania. This law defines the functions of the bank account

register, the reporting manner and use of bank account data, as well as the access and use of this register to identify

suspected assets originating from criminal activities, through banking transactions. It also provides restrictions on

the principle of the right to information based on the confidential nature of the registry data.

• Two decisions of the Council of Ministers “On the approval of the state loan guarantee with commercial banks for

the salaries of traders or trade companies, whose activity is affected by the decisions of the Council of Ministers, in

the framework of the management of the situation caused by Covid-19”, as well as “On determining the terms and

criteria of the guarantee agreement and the memorandum of understanding”.

• Decision of the Council of Ministers “ On the technical and functional requirements of the software solution for the

invoicing and fiscalization procedure, as well as the procedure and criteria for the registration of producers and

maintainers of software solutions”.

• Instruction of the Minister of Finance and Economy “On invoice and turnover monitoring system”.

• Decision of the Council of Ministers “On determining the factors and situations taken into account in assessing the

risks of money laundering and financing of terrorism”.

• Instruction of the Ministry of Justice “On determining the rules for treating financial transactions of the notary and

the clients’ funds”.

• Regulation of the Albanian Financial Supervision Authority “On communication with investors”.

• Regulation of the Albanian Financial Supervisory Authority “ On licensing and additional licensing rules of fund

management companies, depositories of collective investment undertakings, licensing and registration of collective

investment undertakings, established in the Republic of Albania”

Regulatory Framework Improvements / Regulatory framework of the Bank of AlbaniaThe Albanian Association of Banks has engaged and cooperated with the Bank of Albania throughout 2020. Howev-

er, this year focused on the situation created by the pandemic.

• Amendments to the Regulation “On capital adequacy ratio”, which consist in the treatment with a preferential risk

weight of 0% of banks’ exposures for Albanian government debt securities in foreign currency, for securities issued

during 2020 up to their maturity term. In addition, amendments to the Regulation “On risk management of large

exposures of banks”, through which banks can deploy to exclude these types of exposures from the estimation of

the maximum allowable exposure;

• Amendments to the Regulation “On credit risk management by banks and branches of foreign banks”, which through

the addendum of a temporary provision in the above regulations, aim to provide facilities for entities in cases of in-

solvency of borrowers during the specified period (in the context of the situation created by the pandemic).

• Amendments to the Regulation “On credit risk management by banks and branches of foreign banks”, which relate

to the non-application of provisions for credit classification and provisioning by the end of August 2020, the way of

treatment for restructured credits during 2020, as well as the postponement of the entry into force of the regulatory

amendments related to the stringent requirements for credit restructuring for 1.1.2022 (in the context of the situa-

tion created by the pandemic).


COLLABORATION WITH AUTHORITIES

Revitalizing lending and reducing NPLsFollowing the roundtable on “Revitalizing lending and reducing NPLs”, a summary of the banks’ proposals was sub-

mitted to the Bank of Albania and to the Ministry of Finance and Economy. On February 5th, a meeting was organized

with the Deputy Minister Mrs. Belinda Ikonomi, where the next steps on the implementation of the proposals previ-

ously forwarded to Bank of Albania and the Ministry of Finance and Economy were discussed, to be followed by a

potential roundtable to be attended by all stakeholders.

Fiscal and penal amnesty for entities subject to voluntary decla-ration of assetsThe Ministry of Finance and Economy held a series of consecutive meetings with various stakeholders, including AAB

representatives, in the frame the of public consultation process on the draft law “On Fiscal and Penal Amnesty for

Subjects of Voluntary Declaration of Assets”.

√ On July 7th, AAB representatives attended an e-meeting with representatives of the Ministry of Finance and Econo-

my & General Directorate of Taxation. The meeting focused on discussions on the draft law and its technical details.

√ On July 15th & 16th, the AAB Secretariat introduced to the Ministry of Finance and Economy and the Parliamentary

Committee on Economy and Finance respectively, the unified comments and suggestions of the member banks on

the draft law.

√ On July 24th, the AAB Secretary General, along with other banks representatives, attended the hearing session of

the Parliamentary Committee on Economy and Finance, which focused on further elaboration on the draft law. The

comments earlier submitted by the banking sector commission were highly appreciated

Common Reporting Standards (CRS)The AAB Secretariat engaged in an institutional correspondence with the General Directorate of Taxation (GDT) and

the Ministry of Finance and Economy to address banks technical issues related to Common Reporting Standards

(CRS) and bylaws drafted for its implementation, particularly on the extension of the reporting deadline for financial

institutions to November 15th, 2020 (a proposal that was taken into account by the ministry, resulting in the legal

amendment “On automatic exchange of information”).

√ On January 31st, banks compliance and IT departments representatives attended a joint meeting with GDT. The

General Director of GDT, Ms. Delina Ibrahimaj, delivered a short presentation of the adopted Law “On Common Re-

porting Standards”. In this frame, the key issues related to the draft Decision of Council of Ministers (DCM) issued to

the implementation of the Law were raised by bank’s representatives. Following the technical discussions, another

technical meeting was set on February 7th to discuss the Albanian version of the draft DCM to be firstly forwarded

for review to all banks.

√ On August 8th, 2020, an e-meeting was organized, attended by bank and GDT IT and compliance department

representatives. The meeting was also attended by representatives of the company in charge for the development

of the reporting system.

√ On September 24th, 2020, the AAB Secretariat organized a meeting with IT and compliance department bank rep-

resentative and representatives of General Directorate of Taxation. The meeting focused on technical issues on the


CRS. As a follow-up, the AAB Secretariat and banks representatives had ongoing correspondence with General

Directorate of Taxation representatives on technical issues and uncertainties related to the process.

On Tax proceduresAAB was one of the 22 business associations which reacted and opposed the amendments to the Instruction No.

24 of the Minister of Finance “On tax procedures in the Republic of Albania”. Based on this instruction, if the entity,

after the application of all coercive measures for tax liability collection, has not fully repaid all tax liabilities, the tax

administration is entitled to transfer the entities’ remaining tax liabilities to the individual partner, shareholder and/

or administrator. Following a series of discussions with stakeholders, the Ministry of Finance and Economy decided

to withdraw from the instruction that provides for sanctions to seizure the partners, shareholders and administrators

bank accounts.

On fiscalizationOn September 30th, 2020, upon request of the AAB Secretariat, a technical meeting was organized between banks

and GDT fiscalization working group representatives. The meeting focused on some of the major technical concerns

of the banking industry related to this project.

BANKING TRANSFORMATION

Action Plan for E-Commerce In the framework of the Action Plan for e-commerce preparations, on December 11th the inter-institutional working

group held an online meeting. As a follow-up of this meeting and upon request of the Ministry of Finance and Econo-

my, on December 21st, the AAB Secretariat forwarded the relevant authorities all the unified banks’ comments and

suggestions on the opportunities and challenges faced for e-commerce development.

On instant payments On December 4th, AAB representatives met with the World Bank Group team and discussed the current operational

environment and cost structure for retail payments, and the potential challenges in implementing such a system in

Albania. In coordination with the Bank of Albania and following the agreed actions, on December 3rd and 4th, the

World Bank Group team conducted a series of meetings with key sectoral industry members to discuss the outline

team’s study on fast payments implementation scenarios in Albania.

On Central Register of Bank AccountsOn September 16th, representatives of member banks along with the AAB Secretariat attended a consultation meet-

ing with representatives of the Ministry of Finance and Economy and the General Directorate of Taxation to discuss

the new draft Law “On Central Register of Bank Accounts”. The meeting served to introduce the main concerns of the

banking sector on this regard. Subsequently, an official letter was addressed to the Ministry of Finance and Economy

highlighting the respective comments and suggestions thereto.


WORKSHOPS & WEBINARS

Workshop with General Directorate of Taxation (GDT)A workshop on Automatic Exchange of Financial Account Information was delivered on June 25th. Following the con-

cerns raised by several banks, the AAB and GDT organized an e-meeting mainly focused on IT issues. 25 banks’

representatives attended.

Workshop with the Bank of AlbaniaOn June 19th, in cooperation with the Resolution Department of the Bank of Albania and upon request of the banks,

an online workshop was organized on the draft regulation “On the minimum requirement for regulatory capital and

eligible liabilities”.

Following the webinar, comments were forwarded to the Resolution Department.

Positive aspects of the out-of-court dispute resolution on resolving insolvency - Building Awareness of the Business CommunityThe webinar aimed to summarize how the crisis is impacting firm and individual solvency and provided an over-

view of the key policy responses in restructuring and insolvency for both crisis containment and post-crisis recovery.

Moreover, this webinar highlighted the positive aspects of the out-of-court dispute resolution for resolving insolvency

cases, focusing on promoting the application of Alternative Dispute Resolution/mediation /negotiation and facilitation

between the parties (debtors and creditors). The webinar was organized within the mandate of the Debt Resolution

and Business Exit Program II, supported by the Swiss Embassy – State Secretariat for Economic Affairs (SECO), and

was held online on May 14th, 2020.

Seminar focused on computer fraudOn July 15th, 2020, the Albanian Association of Banks, REAL se-

curity, and Group-IB hosted a complimentary informative and

interactive seminar focused on computer fraud. Industry-lead-

ing experts shared their thoughts on today’s main types of com-

puter fraud and how to effectively prevent attacks you’re most

likely to face during and after the lockdown.


On November 19th, 2020, CBK-

Soft in coordination with AAB or-

ganized a webinar on enterprise

content management (ECM) &

banking solutions.

The participants learned more

about Correspondence Manage-

ment, account statement process

(Integration Features), credit card

application (Capture Features),

online application for loan (Form

Management).

Workshop “Positive aspects of the out-of-court dispute resolution for resolving insolvency – Building awareness of business community”The purpose of this event was twofold in lieu of Covid 19 pandemic situation. It aimed to summarize how the crisis

impacted firm and individual insolvency and provided an overview of the key policy responses in restructuring and

insolvency for both crisis containment and post-crisis recovery. Moreover, the webinar highlighted the positive aspects

of the out-of-court dispute resolution for resolving insolvency cases, focusing on promoting the application of Alterna-

tive Dispute Resolution/mediation /negotiation and facilitation between the parties (debtors and creditors).

The webinar was organized online on May 14th, 2020, within the mandate of the Debt Resolution and Business Exit

Program II, supported by the Swiss Embassy – State Secretariat for Economic Affairs (SECO), and attended by bank

representatives.

EnVISION ECM banking solution webinar


TRAINING & DEVELOPMENT OF BANKING EMPLOYEESAAB is the most wide-ranging source of training for banking professionals. During the year, all the training courses

were successfully converted to virtual formats.

IN-HOUSE TRAININGS: • More than 19 trainings delivered.

• Over 275 bank employees trained.

Topic: Digital Banking (R) evolution (classroom)

Date: January 30th-31st, 2020

Partner: ATTF Luxembourg

Attendance: 29 participants

Description: The objective of this course was to provide the participants with

an overview of Open Banking and APIs, FinTech and innovation in digital

banking, Regulation, how to introduce innovation in Europe, Digital Identity,

Security and the link with e-commerce; Digital ledger technologies in digital

finance.

Topic: Agile Project Management (classroom)

Date: February 26th-27th, 2020

Partner: Austrian Institute of Excellence (AIEx)


Description: The training addressed the perspective of working in an agile

environment by being able to quickly deliver on-time customers’ features and

be able to respond to their needs by balancing flexibility and stability in this

ever-changing world.

Topic: Retail Banking, new distributions channels and

e-banking (classroom)

Date: March 2nd-4th, 2020



Description: The training provided a global overview of the distribution strat-

egy in Retail Banking, the combining of different distribution channels and the

transformation needed to succeed.


Topic: Internal Capital and Liquidity Adequacy Assessment

Process (ICLAAP): A risk-based review

Date: March 9th-10th, 2020

Partner: Albanian Institute of Internal Auditors (AIIA)


Description: Understanding the way ICAAP and ILAAP interact with Risk

Appetite and Strategic Planning as well as that more than mere reporting

routines, ICAAP and ILAAP are truly value-adding elements in bank man-

agement today.

Topic: Creditriskandcashflowanalysis(virtualclassroom)

Date: May 13th-14th & 20th-21st, 2020



Description: The course focused on real-life business cases and group exer-

cises to apply knowledge and skills into practice.

Topic: Time management and productivity (virtual classroom)

Date: May 14th-15th, 2020

Partner: Lincoln Center


Description: This program provided participants with tools for managing

their work activities in a way that helps them best accomplish personal and

organizational goals.

Topic: Sales management (virtual classroom)

Date: June 2nd-3rd & 9th-10th, 2020



Description: In collaboration with AIEx, an online training was organised for

the first time in the LMS platform in Albanian language.


Topic: Toward the new Reality - Leadership Resilience

Date: June 23rd-24th, 2020



Description: This course aimed at providing participants with know-how on

the importance of resilience & energy in effective leadership and developed

short but impactful resilience rituals & routines.

Topic: Credit Risk and Cash Flow Analysis - Inspiring Cases

Date: July 6th-7th & 13th-14th, 2020



Description: The workshop focused on helping future and current loan pro-

viders, investors and credit analysts to do their job efficiently and thoroughly.

Topic: Root Cause Analysis

Date: October 8th-9th, 2020

Partner: Albanian Institute of Internal Auditors (AIIA)


Description: The training aimed to address the best practices of RCA cate-

gories and how these can be linked to assessments of organizational culture.

Topic: Agile for Winners

Date: October 20th-21st, 2020

Partner: Agisolve


Description: The training interactively allowed participants to experience ag-

ile frameworks, such as Scrum and Kanban first-hand. Simultaneously, it pro-

vided a solid foundation for understanding the principles and mindset behind

agile methodologies.


Topic: Digital Marketing

Date: October 27th-30th, 2020



Description: The course focused on the latest developments of digital mar-

keting and the use of modern state-of-the-art tools for creating new strate-

gies and campaigns.

Topic: Credit/Counterparty Risk and Risk Modelling

Date: November 4th-6th & November 9th-11th, 2020



Description: This course provided participants with a good understanding of

credit/counterparty risk and the methods for its effective management.

Topic: The Agile Principles and Mindset

Date: November 12th–13th



Description: Participants acquired a deeper understanding of an agile mind-

set and learned on the practices needed to integrate agility into their daily

business.

Topic: Project Management

Date: November 16th-18th-20th

Partner: ATTF Luxembourg with Kosovo Banking Association


Description: The participants gained a good understanding of project man-

agement, the methods and tools used to manage projects and how to ensure

the project success.


Topic: AML - Detect, Deter and Disrupt

Date: November 12th, 2020

Partner: BACEE, Delivered by Analysis International


Description: Update on the European money laundering situation. In-depth

case studies. Trade-based money laundering.

Topic: Managing Remote Teams

Date: November 24th & 25th 2020

Partner: AIMs Albania


Description: This course aimed to share remote-working best practices by

seasoned Danish professionals to whom the “New Normal” is just “Business

as Usual”.

Topic: Operational Risk - Assurance & Improvement Delegates

Date: November 26th & 27th, 2020

Partner: AIIA Albania


Description: Attending delegates attained key concepts, examples and

practical guidance to apply in their day-to-day mission.

Topic: Innovation Management in the Digital Transformation Era

Date: December 15th-16th, 2020



Description: This training provided a first but profound overview on mod-

ern innovation tools and the latest developments in innovation management,

which enabled practitioners to learn via handson-cases.


FINANCIAL EDUCATIONOpen lectures• On January 16th, 2020, the AAB Secretary General, Dr. Spiro Brumbulli organized an open lecture on “The New

Model of Banking”. This lecture was attended by students of the Bachelor study program in Finance-Accounting

at “Aleksander Moisiu” University, Durrës.

• On May 29th, 2020, the AAB collaborated with the European University of Tirana, and the chairperson of the Au-

dit Committee Mrs. Dorida Stambolla, to hold an open lecture on the ongoing challenges faced by internal audit.

The 8th meeting of the (ANFE) organizedOn January 29th, 2020, under the auspices of the Albanian Association of Banks, the Albanian Network for Financial

Education (ANFE) organized its 8th meeting. The meeting focused on financial education strategy and initiatives.

European Cyber Security MonthOctober marks the European Cyber Security Month. AAB and its Information Security Committee organized a series of

webinars which took place all month long. This year’s digital events aimed to explore the rapidly evolving cyber trends

and challenges for banks and to help people identify and be prepared for cyber threats.

• October 15th, 2020 - the 1st webinar on “Cybersecurity in digital age” focused on the risks and challenges of the

digital world, how much the complexity of information systems has increased, can a balance be found between

the growing demands of internet users and security as well as some practical tips for safe online shopping.

• October 22nd, 2020 - the 2nd webinar on “Cyber Security and Challenges in a time of Social Distancing” focused on

the dangers encountered in cyberspace, frauds through different communication channels, how to be safe while

working remotely as well as some practical tips on information security, etc.


World Savings DayOn October 31st, 2020, on the occasion of the World Savings Day and aiming to promote savings to better plan the

needs and opportunities for a better life, AAB organized an online competition for 13-15 years aged.

• October 29th, 2020 - the 3rd webinar on “Cybersecurity and the Albanian Experience” addressed legislative and

regulatory issues of the system and ways for better collaboration.

Webinar on “Applying a behavioural approach to financial services”The World Bank cooperated with the AAB to organize a webinar on “Applying a behavioural approach to financial

services”. This webinar was part of the Greenback Academy, a training series for financial service providers designed

by the World Bank in partnership with the AAB in the context of the remittances and payments program. This initia-

tive is implemented in partnership with the Bank of Albania and the financial support of the Swiss Government. The

webinar took place on November 18th, 2020.


COMMUNICATIONS, PUBLIC RELATIONS AND ADVOCACY While the pandemic altered the way we live and work, the Association continued to be a source for information. The

AAB transitioned the power of connection to online platforms and provided real-time updates to supervisor authority

and government on deferrals, new lending and loan guarantee schemes.

During the year, the Chairman and the Secretary General of the AAB were often invited to deliver speeches or attend

events in Albania and throughout Europe, aiming to elaborate on the views of the sector on key topical issues. AAB

representatives continued to introduce the AAB position on the related issues.

Media presence during 2020: 4 interviews with the Chairman, 12 interviews with the Secretary General and 6 inter-

views with members of Technical Committees.

ACTIVITIES WITH ECONOMIC JOURNALISTS

PARTICIPATION IN NATIONAL & INTERNATIONAL GATHERINGS AND EVENTS

Business breakfast for journalists and me-dia representativesOn February 28th, 2020, the AAB organized a business breakfast with rep-

resentatives of visual and printed media, in the context of strengthening the

working relations and continuous improvement of communication between

the two sectors. The meeting was attended by managers and members of

marketing and communications departments of AAB member banks, as well

as journalists and media representatives. The participants were welcomed

by the AAB Chairman, Mr. Silvio Pedrazzi, while the meeting continued in a

warm and friendly atmosphere, where participants exchanged their thoughts

and ideas for a more fruitful cooperation.

In 2020, the Albanian Association of Banks participated in various regional, national and international meetings and

virtual events. Its representatives (Chairman and Secretary General) made interventions and contributions during

these activities.

The AAB Chairman, Mr. Silvio Pedrazzi at the meeting on “Bank – Business relationships: Common economic challenges in face of global Covid-19 pandemic”On May 13th, 2020, the Bank of Albania organized a discussion forum with the

banking system and business community on: “Bank - Business relationships:

Common economic challenges in face of global pandemic Covid-19”. The

meeting was initiated and organized under the auspices of Governor Sejko


and aimed at encouraging the collaboration between these two groups of

interest, to counter the common economic challenges caused by the Covid-19

pandemic and providing a platform to share views and needs on the

instruments to be employed and the further measures to be taken.

In his speech held at this meeting, the Chairman of the Albanian Associa-

tion of Banks, Mr. Silvio Pedrazzi emphasized the responsibility, profession-

alism and commitment of the banking sector in this extraordinary situation,

ensuring the full range of financial services in response to the needs of the

community. In this context, Mr. Pedrazzi praised the relief measures taken by

the Bank of Albania and the public authorities and called for more legislative

support.

Business breakfast with the Executive General Director of AFSAThe AAB Chairman and CEO of Intesa Sanpaolo Bank Albania, Mr. Silvio Pedrazzi, accompanied by several CEOs of

commercial banks, held a business breakfast with the General Executive Director of the Albanian Financial Superviso-

ry Authority (AFSA), Mr. Ervin Mete and other representatives of the institution. During the meeting, various legislative

matters were discussed such as the new Laws “On Collective Investment Undertaking” and “On Capital Markets in

Albania” recently adopted by the Parliament. AFSA and AAB representatives showed their willingness to cooperate

and organize joint activities to ensure financial education for all financial market participants

Sustainable Development Goals’ 5th AnniversaryMr. Silvio Pedrazzi, AAB Chairman and CEO of Intesa Sanpaolo Bank Albania participated at “SDGs and the Private

Sector in Albania’’, a forum which provided a platform to discuss a wide variety between stakeholders in the panel.

The panellists shared their experiences on the ways companies have tangibly integrate the SDGs into their financing

and operational processes and internal decision-making and also share views on the changing landscape of business

as it contends with global changes.

The AAB Secretary General at the Investment Council Plenary meetingOn June 5th, 2020, the Investment Council (IC) held a plenary meeting via Zoom teleconferencing to discuss key busi-

ness suggestions for the post-COVID-19 economic recovery of the country. The meeting was attended by all IC mem-

bers (state institutions, business members, and key development partners), as well as other high representatives from

business associations and donor’s community. AAB was represented by its Secretary General.

AAB Chairman in the forum “Access to Finance Policies - Support for Albanian Products”On November 2nd, 2020, the second forum of the dialogue “Access to Finance Policies - Support for Albanian Products”

was held, an initiative undertaken by the Ministry of Finance and Economy and the Albanian Investment Development

Agency (AIDA) for policies to support Albanian products. The roundtable of this forum brought together representa-

tives from international institutions, policymakers, banking system and entrepreneurship. Minister Denaj updated the

participants on the sovereign guarantee schemes that the government, together with the banks, provided for busi-

nesses to cover liquidity needs, as well as on the support and advisory schemes provided through AIDA. During the


discussions, the AAB Chairman, Mr. Silvio Pedrazzi highlighted the support provided by commercial banks for lending

to the economy sector, especially small and medium enterprises.

The AAB Secretary General at the Trieste Eastern Europe Invest-ment Forum 2020On June 9th, 2020, the AAB Secretary General, Mr. Spiro Brumbulli participated in the Trieste Eastern Europe In-

vestment Web Forum 2020. Keynote speakers discussed on topics such as the new geo-political context after the

pandemic shock, social protection and investment opportunities and funding, the recovery phase - developing local

capital markets to finance growth and increase liquidity. During his presentation, Mr. Brumbulli underlined the role of

the banking sector at the service of real economy and the challenges for the local banks. The Trieste’s Forum has been

a traditional place of meeting and discussions among policymakers, regulators professionals, academia, and stake-

holders of the financial services sector from countries of the South-Eastern Europe (SEE) since 2016.

Investment Council discusses challenges and recommendations to capitalize on the investment potentials in the agri-processing sectorOn November 10th, 2020, the Investment Council (IC) held a virtual plenary meeting to discuss the main challenges

and recommendations for the promotion of the agri-processing investments. The meeting was chaired by the Minister

of Finance and Economy, Ms. Anila Denaj, and it was attended by almost all IC members. In the frame of this meeting,

a technical study was prepared and presented. Apart from the usual desk-research analysis, the analysis included

findings from a questionnaire conducted with 42 agri-processing companies, as well as relevant information and data

related to access to finance for the sector provided by 8 commercial banks. The speech of the AAB Secretary General

emphasized the role of banks in providing financial support and access to bank credit for SMEs.

BACEE’s 40th online Regional ConferenceOn November 17th, 2020, the AAB Secretary General, Mr. Spiro Brumbulli attended the BACEE’s 40th online Regional

Banking Conference. In his presentation, he briefly covered issues, such as: COVID-19 situation, latest statistics, re-

strictive measures, key government’s measures to support economy, the situation of the banking sector, Q3 results,

perspectives, etc. 149 participants from 26 countries and 74 institutions attended the online Conference and the AAB

was one of the silver sponsors.

VI Meeting of the National Payment Systems CommitteeOn December 17th, 2020, the National Payment Systems Committee (NPSC) held its subsequent meeting. In addition

to NPSC members, this meeting was also attended by other representatives from the international financial institu-

tions, financial and payment systems experts, representatives of the banking system as well as non-bank financial

system. Mr. Spiro Brumbulli, AAB Secretary General, attended the meeting and delivered a presentation on financial

education initiatives of the AAB over the years and the latest AAB information campaign to raise customers’ aware-

ness on the use of bank cards.

Moreover, the AAB Secretariat participated in several events organized by different institutions, such as: Webinar -

The implications for the European economy and some of the wider issues around Financial Inclusion, Webinar - Open-

ing Bank accounts in Cyprus, Greece, Romania, Bulgaria, Montenegro & Serbia, The project “Cross-border Coopera-

tion and Competitiveness for SMEs (3C4SME) meeting, Banking Association for Central and Eastern Europe (BACEE)

Assemble General meeting, European Banking Federation (EBF) Associates meeting, EBF Financial Education Project

Group virtual meeting.


Email newsletters Issued and distributed to members on a monthly basis. These newsletters only address to member banks and aim to

inform and update the readers on the Association’s main activities, meetings with various authorities and organiza-

tions on discussion matters related to the banking sector, attendance of AAB representatives in different meetings,

and the meetings of the Association’s Committees.

StatisticsAAB published on its official website the unaudited quarterly data on the main indicators of the banking system as per

IFRS, as well as monthly aggregate data for the whole system.

The study on “Confidence and Perception of the Customer in Banks and Banking Sector”, the 2nd partOn January 23rd, 2020, the Albanian Association of Banks (AAB) organized an event to introduce the findings of the

second part of the survey. The event was attended by member banks, the Bank of Albania, state institutions, non-

bank financial institutions, international financial institutions, AAB collaborators and media representatives.

PUBLICATIONSAs regards the publications, the Albanian Association of Banks editions were as in the previous years:

“Bankieri” MagazineFour editions of “Bankieri” magazine were bilingually prepared and published in 2020. These include articles written

by banking experts, academics, business representatives, etc. 900 copies per month were distributed to banks, insti-

tutions, individuals, associations, universities and media. The magazines are downloadable online at social network

profiles.Bankieri P

ublic

atio

nN

o. 3

5A

pril

202

0 Bankieri Pub

licat

ion

No.

36

July

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Bankieri Pub

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No.

37

Oct

ober

202

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PAYMENT REVOLUTION

Bankieri

ECONOMIC REMODELING?

Pub

licat

ion

No.

34

Janu

ary

2020

Annual Report 2019 Albanian and English electronic version.

Annual CSR Reports: Banks for society, 2019 Albanian and English hard copies.


The AAB, in cooperation with Master-

card, launched an information campaign

to raise awareness of the consumers on

the use of bank cards to reduce cash

transactions in the economy. Under the

slogan: “Get updated! Walk in time and

be practical with latest ways of pay-

ments. Avoid Cash, Pay by Card!”, the

campaign exposed the traditional way

of using cash, by putting an emphasis

on how unpractical and “old” it is as a

payment method. The concept was vi-

sually presented with two objects (old/

new) placed next to each other in a com-

parison form. On November 4th, 2020,

the AAB, through a press conference,

launched the campaign on the media.

The campaign extended in two months

until end of December 2020.

2020 20202020

2019 20192019

661 Followers 7098 Followers6067 Likes

421 Followers 5872 Followers5756 Likes

SOCIAL MEDIADuring 2020, the AAB content engagement grew, and social media followers grew, as compared to last year.

AWARENESS RAISING CAMPAIGN ON CARD USAGE


Annual DinnerOn February 11th, 2020, the Assem-

bly of Members meeting was held,

mainly focusing on key discussions

on the updates of the organization

of the Association and, in this con-

text, a decision was taken to review

the current AAB Charter. The fo-

cus of the review shall be: (i) a new

governance of the Association; (ii)

setting of the duties for technical

committees; (iii) new regulation on

committee functioning. Moreover,

the Assembly members decided

to extend the mandate of Mr. Silvio

Pedrazzi, acting as Executive Com-

mittee member and AAB Chairman,

and the mandate of Mr. Maltin Kor-

kuti, acting as Executive Committee

member and AAB Vice Chairman up

to the end of 2020. The AAB budged

for 2020 was also adopted.

Following this meeting, the AAB

hosted the Annual Dinner, its tra-

ditional gala event on the occasion

of the completion of one financial

year and getting ready for the sub-

sequent year. The CEOs of member

banks, special guests by the Bank of

Albania, the Governor, the First Dep-

uty Governor and the Second Depu-

ty Governor, the Director of Deposit

Insurance Agency and other direc-

tors attended the event. A special

greeting was made to Mr. Gazmend

Kadriu, on the occasion of comple-

tion of his mission as CEO of Union

Bank.

SOCIAL ACTIVITIES


TECHNICAL COMITTEES - HIGHLIGHTS AND ACHIEVMENTS

Bank Security Committee Throughout the year, the committee members discussed the security issues faced the working environments and

other challenges encountered. In multiple cases, they collaborated with state authorities on issues that banks faced

in the light of the pandemic.

In October, the AAB Secretary General and the Charman of AAB Security Committee attended the meeting of

the National Security Committee of Civil Aviation. Discussions focused on the transport of valuable cargo and the

subsequent steps to improve the transport system, following the responses of the Bank of Albania and the General

Directorate of Customs.

On December 21st, 2020, the representatives of the Committee met with the Chief of Rinas Police Commissariat to

discuss the decision taken by the General Director of the State Police, who issued an order for the withdrawal of forces

from Rinas Airport, and the issue of transportation of monetary values to/from Rinas Airport.

Card CommitteeThe committee members discussed on issues of common concern, such as: The Interchange Reduction (national pay-

ment), activities related to the card industry, Visa and Mastercard mandates, fraud matters, etc. Furthermore, the

members cooperated on the spread of information and awareness raising campaigns.

Communication / PR CommitteeThe periodical publications of the AAB and the Sustainable Development Goals were the main topics of the meeting

organized on January 28th. The committee members engaged in a series of activities with economic journalists, i.e.:

the business breakfast organized in February and the press conference on the launch of cards use awareness raising

campaign organized later on in November.

Human Resources Committee The committee members discussed on the government measures set for financial institutions as a result of COVID-19

pandemic. Other topics of interest included: the online trainings provided by AAB in collaboration with other partners,

and the participation of member banks at the Salary and Reward Survey with Korn Ferry.

Internal Audit Committee On May 6th, the committee held an online meeting to discuss and share their experiences on the way they continue

to responsibly manage their work during the new normal emerging as a result of the COVID-19 pandemic. May is the

International Internal Audit Awareness Month. With the aim to promote internal audit values during this month, AAB

collaborated with the European University of Tirana and on May 29th, the Chairperson of the Committee Mrs. Dorida

Stambolla, held an open lecture on the topic “The ongoing challenges for internal audit”.

On December 23rd, the Committee organized its online meeting. The agenda involved discussions on the challeng-

es faced by audit in 2020, priorities and new ways of working for 2021. In addition, the members prepared a list of

training topics that internal audit department employees need.


Information Security CommitteeDuring the online gathering on June 10th, 2020, the members discussed on the relief measures undertaken during the pandem-

ic and the findings from the National Authority for Electronic Certification and Cyber Security (AKCESK) as well the statement

that critical infrastructures faced problems during the attacks improvised by the Authority.

• On September 11th, the AAB Information Security Committee held a meeting, where the main technical concerns of member

banks related to electronic signature and documents were discussed.

• On September 17th, the AAB Secretariat organized an online meeting with representatives from the National Agency of

Information Society, where the latter clarified the concerns raised by banks. As a follow-up, the Secretariat officially ad-

dressed to the Authority the inquiries of the Committee and informed the members accordingly.

• On September 28th, the chairmanship of the committee discussions focused on planning cyber security activities that took

place during the European Cyber Security Month. This year’s digital event aimed to explore the rapidly evolving cyber trends

and challenges.

Legal CommitteeThe chairmanship of the committee gathered to better elaborate on all remarks and suggestions of member banks as regard

the draft regulation “On defining the rules for regulating financial transactions of notaries and funds of clients and of third

parties.” The AAB Secretariat submitted the aggregated material through an official letter addressed to the Ministry of Justice.

Upon recommendation of the committee, the Secretariat addressed an official request to the Cadastral State Agency on the

proper implementation of Instruction No. 1361, dated 2.05.2020 “On the electronic signature of cadastral acts for services

provided by the Cadastral State Agency and approval of working procedures”.

On October 22nd, the AAB Secretary General, along with the chairmanship of the Legal Committee, attended a meeting

with representatives of the Ministry of Finance and Economy, American Chambers of Commerce (AmChams) and Confindu-

stria to discuss on the amendment to Instruction no. 24, dated 02.09.2008 “On tax procedures in the Republic of Albania”, as

amended, related to account’s blocking.

Following the discussions of the EC members, the AAB Secretariat, in collaboration and with the contribution of the work-

ing group comprising of banks lawyers and Legal Committee chairmanship, addressed an official letter containing all banks’

concerns and proposals on the consequences of anti-mafia law on banks’ securities interests.

Risk Committee On February 3rd, 2020, the committee organized a meeting focused on the platform for the lending revitalization. A set of

working groups were established to meet and execute the deadlines of the plan, focused on some of the platforms’ objectives.

During the month, as per the platform requirements, the secretariat sent two letters to the relevant authorities and partner

institutions, i.e.: “On the best practices for risk-sharing agreements” and “e-Albania” platform. In addition, the Secretariat ad-

dressed the Bank of Albania a request to continue the application of risk weight of 50% for Albanian Government securities

investments in foreign currency. During the year, the Secretariat collaborated with the Committee members to provide the

supervisor authority and government with real-time updates on deferrals and lending.

Treasury and Financial Market CommitteeOn January 10th, the committee chairmanship elections were held. The new chairmanship of the committee is comprised of:

Ms. Suela Totokoci from Intesa Sanpaolo Bank Albania, chairperson; Ms. Teuta Cinari from ABI Bank, vice chairperson and

Ms. Donalda Gjorga from Raiffeisen Bank, member of chairmanship. In addition, the updates and progress of Market Markers

project was part of the agenda.

The committee discussed and exchanged opinions on the process of changing/replacing reference interest rates, as a

request from the Bank of Albania.


MEETINGS WITH PUBLIC INSTITUTIONS

Meeting with the Albanian Diaspora Chamber of CommerceOn September 4th, the Secretary General had a meeting with representatives of the Albanian Diaspora

Chamber of Commerce, where a series of activities of both organizations were introduced, including any

potential opportunities for common interest cooperation.

Meeting with the National Chamber of NotariesOn October 22nd, the AAB Secretariat and banks met with representatives of the National Chamber of No-

taries. Participants discussed the key issues faced by banks and notaries during their day-to-day activity, as

well as ways how to strengthen cooperation between both parties.

Meeting of AAB representatives with the Albanian Deposit Insurance AgencyThe New Strategic Platform on Improving the Quality of Data for Deposits and Depositor was discussed

in the meeting held on October 20th. Through constructive consultations with members of the scheme, this

strategic platform aims to determine measurable indicators for each bank or savings and credit association

to improve the quality of data associated with timeframes set to be met by them, as well as to enable moni-

toring of the improvement of these indicators by the Agency.

MEETINGS WITH INTERNATIONAL INSTITUTIONS

Online meeting with IMF teamA team from the Fiscal Affairs Department of the International Monetary Fund (IMF), led by Ms. Suzanne

Flynn, Mr. Fritz Bachmair and Ms. Linda Spahia collaborated with the financial authorities and institutions in

the country to support the Albanian government in the management of potential fiscal risks related to gov-

ernment guarantees.

In this regard, on May 14th, the banking sector introduced its perspective to the guarantee schemes. Ac-

cordingly, NPLs data was the discussion topic between the AAB Secretary General, Mr. Brumbulli and the

team members.

Meetings with IMF representativesOn June 26th, the IMF team led by Ms. Yan Sun held a virtual meeting with the AAB Secretary General, Mr.

Spiro Brumbulli. The participants discussed on the key risks faced by the banking system as a result of the

earthquake, the Covid-19 pandemic and economic downturn, the consequences of the Euro Area Covid-19

developments on Albania’s economic outlook, the market expectations on future exchange rate develop-

OTHER MEETINGS IN 2020

The Association organized a series of meetings that brought together top decision-makers from member banks

and experts from a wide range of sectors, providing unique opportunities for high-level dialogue and exchange on

emerging and priority topics.


ments and other related issues.

On September 21st, an e-meeting was organized with the IMF team. During the meeting, the AAB Sec-

retary General introduced his views on the recent macroeconomic environment and prospects for the short-

term and medium-term economic growth, the main changes and the key risks to the banking system after

Covid-19 outbreak, the implementation of BOA’s Covid-19 relief measures, etc.

Meeting with the European Commission representativesOn December 3rd, the AAB Chairmen, Mr. Pedrazzi along with the AAB Secretary General held a virtual

meeting with the European Commission team to discuss Albania’s Economic Reform Program 2021-2023,

the business environment challenges, features and opportunities for the coming years.

Mr. Pedrazzi emphasized that despite this unprecedented and challenging year, there are improvements

marked in digital transformation and green economy.

The European Commission team was chaired by Mr. Javier Menendez Bonilla from DG NEAR, and it was

attended by Andrew Williams and Christina Vanghele from DG NEAR, Sarah Jurreit from DG ECFIN and

Kamil Valica from DG Employment.

Meeting with World Bank representatives on instant pay-ments In coordination with the Bank of Albania, and following the agreed actions, the World Bank Group team

conducted a series of meetings on December 3rd and 4th, with key sectoral industry members to discuss the

outline team’s study on fast payments implementation scenarios in Albania. On December 4th, the team met

with AAB representatives to have a better understanding of the current operational environment and cost

structure for retail payments, the retail payment cases that an FPS could potentially serve, and the potential

challenges in implementing such a system in Albania.

Consultative meeting on the Cooperation Framework The United Nations County Team (UNCT) for Albania has initiated the preparation process for a new United

Nations Sustainable Development Cooperation Framework (CF) for the period 2022-2026. On December

14th, a virtual meeting was organized to discuss the United Nations Sustainable Development Cooperation

Framework proposed priorities and outcomes for cooperation.


FIGURES ON THE MEMBER BANKS


Bank Shareholders' structure Country of origin

Assets (ALL000)

Loans,net (ALL000)

Investments in securities (ALL000) Equity

capital (ALL000)

Deposits (ALL000)

Net profit (ALL000)

No. of outlets

No. of employees

No. of ATMs

No. of cards issued

Debit cards

Credit cards

No. of POS

E- banking

Mobile Banking

E- commerce

Government securities Other

Alpha Bank A.E. 100% Greece 77,033,448 33,642,214 7,417,912 12,567,177 9,173,697 62,930,067 218,419 34 419 49 40,002 34,512 5,490 1,246

Tranzit Sh.p.k. 100 % Albania 87,064,729 29,278,082 35,146,559 10,312,414 68,199,118 1,064,080 21 365 30 15,483 14,559 924 -

Calik Finansal Hizmetler A.S. 100% Turkey 421,900,552 93,512,681 126,149,941 78,209,341 49,584,036 334,879,723 6,396,697 64 940 101 374,919 326,118 48,801 6,779

Renis Tershana 18.53% Albania

246,777,346 106,809,269 44,774,499 38,883,028 18,570,041 217,994,494 909,036 58 964 71 188,895 121,180 6,053 1578

Aleksander Pilo 8.27% Albania

B.F.S.E. Holding BV 15.21% Netherland

Amryta Capital LLP 6.45% United Kingdom

Others 51.10%

Fibank AD 100% Bulgaria 34,243,838 17,098,142 9,626,599 324,382 3,646,591 28,617,005 375,204 14 351 34 39,511 35,468 4,043 -

Intesa Sanpaolo S.p.A. 100% Italy 188,630,803 50,902,837 66,546,466 5,527,255 23,051,769 159,507,095 1,294,535 35 657 57 112,651 111,992 659 658

OTP NYRT 100% Hungary 96,480,783 58,453,672 21,779,703 - 9,456,255 72,890,101 663,004 38 464 80 66,065 63,641 2,424 -

ProCredit Holding AG & Co. KGaA 100% Germany 35,446,845 25,298,202 1,293,444 - 3,187,390 24,004,806 (440,616) 5 121 16 9,850 9,833 17 -

Raiffeisen SEE Region Holding GmbH 100% Austria 237,129,901 88,287,982 51,158,445 9,515,724 29,422,146 203,020,446 1,486,151 74 1,324 178 332,699 298,166 34,533 1,615

Balfin Sh.p.k. 100% Albania 84,390,894 37,991,132 25,072,888 4,955,222 9,984,782 71,569,313 648,268 35 478 72 75,915 71,023 4,892 210

Islamic Development Bank 72.20% Saudi Arabia

9,868,942 5,968,858 - - 1,293,633 8,492,192 (148,620) 6 84 - 490 490 - - Eurosig Sh.a. 21.02% Albania

Others 6.78% Bahrain

Unioni Financiar Tirane (UFT) Sh.p.k. 92.24% Albania

71,862,316 31,661,639 23,968,643 964,079 5,809,570 60,528,794 476,057 32 400 48 38,628 32,068 6,560 80 European Bank for Reconstruction and Development 4.22% United

Kingdom

Individuals 3.54% Albania

TOTAL 1,513,796,949 545,262,496 405,517,187 138,379,031 164,318,627 1,249,703,087 12,723,796 382 6,148 687 1,255,106 1,084,538 108,906 10,920

Audited data according to IFRS, as of 31.12.2020 (1 EUR = 123.70 lekë; 1 USD = 100.84 lekë ) (in thousand of ALL)

* Unaudited data

*

*

*


Bank Shareholders' structure Country of origin

Assets (ALL000)

Loans,net (ALL000)

Investments in securities (ALL000) Equity

capital (ALL000)

Deposits (ALL000)

Net profit (ALL000)

No. of outlets

No. of employees

No. of ATMs

No. of cards issued

Debit cards

Credit cards

No. of POS

E- banking

Mobile Banking

E- commerce

Government securities Other

Alpha Bank A.E. 100% Greece 77,033,448 33,642,214 7,417,912 12,567,177 9,173,697 62,930,067 218,419 34 419 49 40,002 34,512 5,490 1,246

Tranzit Sh.p.k. 100 % Albania 87,064,729 29,278,082 35,146,559 10,312,414 68,199,118 1,064,080 21 365 30 15,483 14,559 924 -

Calik Finansal Hizmetler A.S. 100% Turkey 421,900,552 93,512,681 126,149,941 78,209,341 49,584,036 334,879,723 6,396,697 64 940 101 374,919 326,118 48,801 6,779

Renis Tershana 18.53% Albania

246,777,346 106,809,269 44,774,499 38,883,028 18,570,041 217,994,494 909,036 58 964 71 188,895 121,180 6,053 1578

Aleksander Pilo 8.27% Albania

B.F.S.E. Holding BV 15.21% Netherland

Amryta Capital LLP 6.45% United Kingdom

Others 51.10%

Fibank AD 100% Bulgaria 34,243,838 17,098,142 9,626,599 324,382 3,646,591 28,617,005 375,204 14 351 34 39,511 35,468 4,043 -

Intesa Sanpaolo S.p.A. 100% Italy 188,630,803 50,902,837 66,546,466 5,527,255 23,051,769 159,507,095 1,294,535 35 657 57 112,651 111,992 659 658

OTP NYRT 100% Hungary 96,480,783 58,453,672 21,779,703 - 9,456,255 72,890,101 663,004 38 464 80 66,065 63,641 2,424 -

ProCredit Holding AG & Co. KGaA 100% Germany 35,446,845 25,298,202 1,293,444 - 3,187,390 24,004,806 (440,616) 5 121 16 9,850 9,833 17 -

Raiffeisen SEE Region Holding GmbH 100% Austria 237,129,901 88,287,982 51,158,445 9,515,724 29,422,146 203,020,446 1,486,151 74 1,324 178 332,699 298,166 34,533 1,615

Balfin Sh.p.k. 100% Albania 84,390,894 37,991,132 25,072,888 4,955,222 9,984,782 71,569,313 648,268 35 478 72 75,915 71,023 4,892 210

Islamic Development Bank 72.20% Saudi Arabia

9,868,942 5,968,858 - - 1,293,633 8,492,192 (148,620) 6 84 - 490 490 - - Eurosig Sh.a. 21.02% Albania

Others 6.78% Bahrain

Unioni Financiar Tirane (UFT) Sh.p.k. 92.24% Albania

71,862,316 31,661,639 23,968,643 964,079 5,809,570 60,528,794 476,057 32 400 48 38,628 32,068 6,560 80 European Bank for Reconstruction and Development 4.22% United

Kingdom

Individuals 3.54% Albania

TOTAL 1,513,796,949 545,262,496 405,517,187 138,379,031 164,318,627 1,249,703,087 12,723,796 382 6,148 687 1,255,106 1,084,538 108,906 10,920


Financial Statements and Independent Auditor's Report


As of and for the year ended 31 December 2020


Contents

INDEPENDENT AUDITORS REPORT...................................................................................................... i - iii STATEMENT OF FINANCIAL POSITION.......................................................................................................1

STATEMENT OF FINANCIAL ACTIVITIES...................................................................................................2

STATEMENT OF CASH FLOW............................................................................................................................3

NOTES ON THE FINANCIAL STATEMENTS............................................................................................4-9


Grant Thornton Sh.p.k. Rr: Sami Frasheri, Kompleksi T.I.D, Shk. B Floor 1, 10 000 Tirana, Albania T +355 44 525 880 M +355 69 4014 701 www.grantthornton.al [email protected]

`World Vision Albania

This version of our report/the accompanying documents is a translation from the original, which was prepared in Albanian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

i

Independent Auditor’s Report

To the Board of Directors of “Albanian Association of Banks”

Opinion

We have audited the financial statements of “Albanian Association of Banks” (hereafter referred as the “Organization”), which comprise the statement of financial position as at 31 December 2020, the statement of activities, the statement of cash flows for the year then ended and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Organization as at 31 December 2020, its financial performance and its cash flows for the year then ended in accordance with the National Accounting Standard for Non-Profit Organisations in Albania.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Organization in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Albania, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.



ii

Other Matters

The financial statements of the Organization for the year ended 31 December 2020 were audited by another Auditor who expressed an unqualified opinion on those financial statements on 2 June 2020

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the National Accounting Standard for Non-Profit Organisations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Organisation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Organisation or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Organisation’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organisation’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.



iii

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Organisation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Organization to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Grant Thornton sh.p.k.

Tirana, Albania 23 March 2021

47 A N N UA L R E P O RT 2020Albanian Association of Banks FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are expressed in ALL, unless otherwise stated)

1

Statement of Financial Position

Notes 31 December 2020 31 December 2019

ASSETS Current Assets Cash on hand and at banks 4 5,649,688 7,075,012

Membership fees receivable 5 288,990 2,435,400

Prepaid expenses 6 280,160 280,160

Total current assets 6,218,838 9,790,572

Non-current Assets Fixed assets, net 7 743,274 923,593

Total non-current assets 743,274 923,593

TOTAL ASSETS 6,962,112 10,714,164

LIABILITIES Current Liabilities

Payable accounts 8 728,934 3,015,125

Total current liabilities 728,934 3,015,125

Net assets 9 6,233,178 7,699,039

TOTAL LIABILITIES 6,962,112 10,714,164

The Statement of Financial Position is to be read in conjunction with the notes from page 4 to 9 forming part of the financial statements. These financial statements have been approved by the Albanian Association of Banks (AAB) on 31.03.2021 and signed by:

Spiro BRUMBULLI

Secretary General

Albanian Association of

Banks

PricewaterhouseCoopers Consulting

Preparer of the Financial Statements

A N N UA L R E P O RT 2020 48Albanian Association of Banks FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 (all amounts are expressed in ALL, unless otherwise stated)

2

Statement of Financial Activities


INCOME

Membership fees 10 23,239,500 27,033,500

Donations and voluntary contributions 10 4,303,950 5,933,825

Other income 10 1,982,878 3,762,009

Membership fee for major force disasters 10 - 34,264,000

Total Income 29,526,328 70,993,333

EXPENDITURES

Depreciation 7 (189,685) (247,443)

Operating expenses 11 (8,391,416) (13,503,627)

Promotion and publicity expenses 12 (3,392,026) (6,409,210)

Administration and general expenses 13 (19,043,111) (18,186,067)

Membership expenses for natural disaster 13 - (34,396,000)

Gain / (Loss) from exchange rate 24,050 (99,444)

Total Expenditures (30,992,188) (72,841,791)

Change in net assets (1,465,860) (1,848,458)

Net assets at the beginning of the year 7,699,039 9,547,497

Net Assets at the end of the year 6,233,179 7,699,039 The Statement of Income and Expenditure is to be read in conjunction with the notes from page 4 to 9 forming part of the financial statements.


3

Statement of Cash Flows


Cash flow from operating activities

Excess/(Deficit) of income over expenditures (1,465,860) (1,848,458)

Adjustments for:

Depreciation 7 189,685 247,443

Receivable accounts 5 2,146,410 314,971

Proceeds for payable accounts 8 (2,286,191) 70,190

Cash flow from operating activities (1,415,956) (1,215,865)

Cash flows from investing activities

Purchase of fixed assets 7 (9,368) (35,000)

Cash from investing activities (9,368) (35,000)

NET INCREASE IN CASH (1,425,324) (1,250,865)

Cash and cash equivalent at the beginning of the year 4 7,075,012 8,325,877

Cash and cash equivalent at the end of the year 4 5,649,688 7,075,012 The statement of cash flow is to be read in conjunction with the notes from page 4 to 9 forming part of the financial statements.


4

Notes to the Financial Statements

1. Background Information

The Albanian Association of Banks (AAB or the ‘Organisation’) was established on 15 April 1999. The Registered Office of AAB is located at Rr. Ibrahim Rugova, Sky Tower, Floor 9, Ap. 3, Tirana, Albania.

AAB is a not-for-profit association, seeking to promote the latest banking standards of its member banks, development, stability, and effectiveness of the Albanian banking system in general, thus contributing to the progress of the Albanian economy. AAB is constituted by 12 voluntary members: Alpha Bank Albania, American Bank of Investments, Credins Bank, United Bank of Albania, First Investment Bank Albania, Intesa Sanpaolo Bank Albania, International Commercial Bank, OTP Bank Albania, Procredit Bank, Raiffeisen Bank, Tirana Bank and Union Bank.

ABB had 6 employees as of 31 December 2020 (2019: 6)

2. Basis of preparation

Financial Statements are prepared according to the National Accounting Standard for non-profit organisations and Law on Accounting and Financial Statements. The National Accounting Standard for non-profit organisations has come into force from 1 January 2016.

The Financial Statements are presented in ALL, which is the functional currency of the Association.

(a) Historical Cost

Items in the financial statements are recognized at historical cost.

(b) The principle of going concern

The financial statements are prepared on a going concern basis, which means that the economic activity of the Albanian Banking Association will be continued, and that it does not plan or need to cease its operations. The organization did not cease its work during the lock down measures of the global pandemic. Also all the member Banks of the Association continued their activity without interruption, as most of the businesses from the restrictive measures of the government. During 2020 all donors of the organization have disbursed their funds based on the Statute of the organization in accordance with the plan of activities for 2020, with the exception of the last instalment of 2020 approved by the decision of the assembly dated 10.12.2020. The general assembly of the organization by decision 4 dated 10.12.2020 has approved the financial plan for 2021 for the total amount of ALL 33,146,580. The organization continues to implement measures to prevent the negative impact of the Pandemic on its activities and estimates that it will continue the activity based on the principle of continuity, for a period of time at least for the next 12 months.


5

3. Significant accounting policies

I. Revenue and expenses

Revenues are recognized at fair value of the amount received or payable. Expenses are recognized in the same period with the income related to them.

The main revenues of the Association are generated by membership fees, which are subject of Assembly of Members approval.

Revenue is recorded when realized and expenses are recorded when occurred.

II. Transactions in foreign currency

The AAB measurement and presentation currency is the Albanian Lek (ALL). All contributions and the majority of transactions are carried out in ALL. Transactions in foreign currency are converted in ALL at the rate of exchange of the day the transaction is carried out. All balances in foreign currency at the end of the year are converted in ALL at the exchange rate of Bank of Albania as at the last day of the year as follows:

The exchange rate as at:

31 December 2020 31 December 2019 ALL/EUR 123.7 121.77

III. Office and IT equipment and term

The initial valuation of the elements that meet the recognition criteria as PPE in the balance sheet is made at purchase cost plus other direct costs related to the asset's behaviour at the location and the conditions necessary for its operation, according to the purposes of the association. The following valuation is made according to the cost model, and the PPEs are presented in the balance sheet at their net value (minus accumulated amortization and depreciation, if any). Depreciation is charged starting from the month subsequent to the month of acquisition.

Amortization rates and method according to PPE groups:

Depreciation rate Used method Computer equipment 25% Residual value Office equipment 20% Residual value Other PPEs 20% Residual value

IV. Taxes and local taxes

AAB is a non-profit organization and is excluded from income tax. The association is subject to withholding tax, personal income tax, social and health insurance contributions and local taxes and fees.


6

4. Cash and cash equivalents

Cash and cash equivalents are composed as follows:

31 December 2020 31 December 2019

Current account in ALL 3,743,272 6,737,272

Current account in EUR 1,892,238 282,748

Cash on hand 14,178 54,992

Total 5,649,688 7,075,012

5. Contributions Receivable

Contributions receivable is composed as follows:


Membership 288,990 2,435,400

Total 288,990 2,435,400

6. Prepaid Expenses

Prepaid expenses are composed as follows: 31 December 2020 31 December 2019

Rent guarantee 280,160 280,160

Total 280,160 280,160

7. Fixed Assets

Fixed assets are composed as follows:

Furniture Electronic Equipment Total

Cost

At 31 December 2019 2,060,691 1,959,306 4,019,997

Additions for year 2020 - 9,368 9,368

Disposals for year 2020 - - -

At 31 December 2020 2,060,691 1,968,673 4,029,364

Accumulated Depreciation At 31 December 2019 1,703,844 1,392,560 3,096,404

Depreciation for year 2020 47,369 142,316 189,685

Disposals for year 2020 - - -

At 31 December 2020 1,751,213 1,534,876 3,286,090

Net carrying value At 31 December 2019 356,847 566,746 923,593

At 31 December 2020 309,478 433,797 743,274


7

8. Payable and other liabilities

Payable and other liabilities are composed as follows:


Personal Income Tax 371,973 362,776

Health and Insurance Contributions 216,641 216,949

Suppliers 125,571 2,435,400

Withholding Tax 14,749 -

Total 728,934 3,015,125

9. Net Assets

Net Assets is the difference between the assets and liabilities of the Organisation at the statement of financial position.

The change in net assets presented in the statement of operations is articulated in net assets presented in the statement of financial position.

Net assets presented as unrestricted are used in the following periods only for the objectives set out in the statute of the AAB.


Balance carried at the beginning of the period 7,699,039 9,547,496

Increase/(decrease) from change of net assets (1,465,860) (1,848,458)

Balance that is carried forward in the coming year 6,233,179 7,699,039

10. Income

The income of the organization represents the value of the funds received during 2020 from the Banks for the realization of activities in accordance with the statute of the organization.

For the year ended on 31

December 2020 For the year ended on 31

December 2019

Membership fee from member banks 23,239,500 27,033,500

Sponsorships from banks 4,303,950 5,933,825

Trainings from member banks 1,982,878 3,762,009

Additional quota for natural disaster - 34,264,000

Total 29,526,328 70,993,333

The additional quotas for emergencies for the year 2019, are related to the earthquakes of 21 September and 26 November 2019, which hit the country. These quotas are donated to the Prefecture of Korça for the earthquake of 21 September and the Albanian Government for the earthquake of 26 November respectively.


8

11. Operating Expenses

Organization expenses for activities represent expenses for main activities according to the requirements of member Banks in accordance with the statute of the organization.



December 2019

Trainings for member banks 6,322,222 6,688,638

Events and Workshops 1,024,884 5,398,944

Memberships 1,044,310 1,057,600

Travel expenses - 358,455

Total 8,391,416 13,503,627

12. Promotion and publicity expenses



December 2019

Publications 3,306,710 3,364,027

Informative materials and marketing 85,316 3,045,184

Total 3,392,026 6,409,210

13. Administration and general expenses

General expenses and administration are analyzed as follows:



December 2019

Personnel Salaries 11,753,997 11,272,229

Rent 2,971,440 2,956,500

Health & Insurance Contributions 1,247,582 1,164,004

Communication expenses 1,145,130 1,150,483

Financial Consulting expenses 880,090 462,990

Other expenses 344,427 343,707

Stationary & other supplies 288,395 338,600

Health Insurance 186,225 182,565

Utility Expenses 138,600 161,887

Translation Services 36,222 68,589

Bank Fee & Commissions 21,267 43,012

Local Taxes 15,000 15,000

Media Subscriptions 14,175 17,500

Notary Expenses 560 9,000

Expenses for natural disaster - 34,396,000

Total 19,043,111 52,582,067 Expenditures for extraordinary cases are related to the quotas donated to the Prefecture of Korça for the case of the earthquake of September 21 and the Albanian Government for the case of the earthquake of November 26, respectively.


9

14. Conditional commitments and obligations

Legal issues As at 31 December 2020, no litigation has been brought against the Organization or by the Organization.

Rental commitments The company has commitments for the lease contract for the premises for the development of activities for a period of up to one year 1.

15. Related party transactions

The organization has had related party transactions throughout the normal course of business. The main transactions are those related to funds received from Banks.

16. Events after the reporting date

The management of the Organization is not aware of any events after the reporting date that would require additional adjustments or explanations to these financial statements.

ANNUAL REPORT

fcb afirma

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